A Guide to Entertainment

Need some help navigating the mysterious world of ‘Entertainment Expenses’ read our guide for some clarity to your accounting.

An entertainment expense is business related if it helps the business earn income for example improving employee morale or entertaining clients.

If we think of the word entertaining this often suggests food, drinks, and a social environment – this style of entertaining is generally only 50% tax deductible.

Pure business-related expenses may be 100% - i.e., a meal for a staff member who’s staying out of town on business (who is not entertaining clients).

So, if it looks or feels ‘social’ but you are with work colleagues, clients, or suppliers (actual or potential) then the rule of thumb is 50%, if you’re with family or friends it is private, if you’re solo and away on business it is generally 100%.